E-Commerce in Saudi Arabia: adoption and perspectives

Among one of the most far-reaching influences of the Internet, especially from the perspective of business and market models, is the concept and application of eCommerce. Today, this erstwhile ‘experimental’ commerce model has become a standard platform for streamlining business flows and broadening product outreach. This is validated by the significant emphasis by a number of countries in developing robust eCommerce architectures tailored to suit their economical-social systems. An interesting case study in this perspective is the Kingdom of Saudi Arabia, especially given its emphasis on local, regional and religious traditions. Presently, with a tremendous growth rate in Internet connectivity, the Kingdom is actively moving towards large-scale adoption of eCommerce systems. In 2001, a two year project was initiated to study the present influence of Internet on social, educational and business systems within the Kingdom. One of the major aspects was the analysis of user responses collected over the two-year period through a number of surveys, which were designed based on two prominent behavioural models: Theory of Planned Behaviour and Roger’s Theory of Diffusion of Innovations. The consequent analysis of the results was supported and in some cases verified with linear regression models. This paper reports on the consequent findings, which identify factors that may significantly affect the adoption of eCommerce in the Kingdom.

Saudi Arabia Internet Users and e-commerce survey

The survey report has 92 detailed exhibits and 72 pages. This survey report can be purchased from the Arab Advisors Group for only US$ 3,000 for subscribers to Arab Advisors Strategic Research Services. Non-Subscribers to Arab Advisors Groups Strategic Research Services can order the report for US$ 3,750.

More details on these survey reports and their TOCs can be viewed at http://www.arabadvisors.com/specialoffers.htm . Purchasing all four reports entails a 15% discount. Companies can choose to only order the e-commerce sections of the four surveys for only 1500 US$.

The Arab Advisors Group’s team of analysts in the region has produced over 1,030 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Services (Media and Telecom). To date, Arab Advisors Group has served over 460 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients. Some of our clients can be viewed on http://www.arabadvisors.com/clients.htm

Spotlight on Saudi

Saudi Arabia is undergoing a huge rise in construction, but how is the regional industry coping with the vast demand? Hugo Berger reports on the current challenges facing the sector in the Kingdom.

Saudi Arabia’s construction sector is already so huge that it is even dwarfing that of the UAE. With around a quarter of the world’s proven oil reserves, the vast wealth of the region is stimulating private and public sector investment in new construction projects.
The landmark Kingdom Centre and Al-Faisaliah Tower in Riyadh are both symbols of the country’s attempts to be a world leader in futuristic construction. Jeddah’s corniche is undergoing huge development and soon tenders are expected to go in for the world’s tallest tower, which is rumoured to be a mile (1.6km) in height.

Half of Saudi internet users embrace e-commerce

The Arab Advisors Group has released the results of a survey showing that e-commerce has achieved noteworthy popularity in the Kingdom of Saudi Arabia.

The survey showed that 48.36% of internet users in the Kingdom had purchased products online or using their mobile phones in the last twelve months. That represents more than 3.5 million e-commerce customers, or 14.26% of the Kingdom’s total population.

The Arab Advisors Group has estimated that these transactions totalled $3.28 billion, and says the survey yields a confidence level of 99% with a 2% margin of error.

Founder and General Manager of Arab Advisors Group said

Mr. Jawad Abbassi, Founder and General Manager of Arab Advisors Group said: “Saudi Arabia’s large population, its booming economy and increased Internet adoption, provide an ideal context for a thriving e-commerce scene. Our major survey of Internet users in Saudi Arabia revealed a massive size for B2C e-commerce in the country which presents opportunities for global and regional e-commerce players to tap into this growing market.”

Interested To Read:

I found this in the web and I like you read it:

 http://bitporters.net/2007/06/12/facebook-isnt-evil-application-ideas/

Facebook isn’t Evil / Application Ideas

June 12, 2007

I was having a “everyone we know is on facebook” conversation with some friends yesterday. Someone pointed out this lovely piece of FUD. Basically to sum it up — Facebook did 9/11

Hehe, seriously I DO think you should put some conscious thought into how far you map out your entire life online. However I think if the evil overlords of this planet wanted to know what you like, who your friends are and how hard you partay on a scale of “1 to hellsss yea”… they probably already do (unfortunately I’m #2 on that scale).

I also saw a discussion about how this new addition makes it impossible for new websites to start and how every new innovation will just have to be plugged into Facebook if it is to have any hope of succeeding. Another valid concern but I actually Facebook fixed a big problem for us and they just did all us developers a huge favour! I think over the years people are sick of creating “social profiles” – especially for “1 use” websites. Facebook has momentum and is getting “the 80%” people to sign up. These “80% people” would *never* sign up for your niche website – but they *might* try it now. So be clever, use your FB application to attract these users into your site.

So Please — stop being afraid of this — the API is something to leverage and take advantage of. I think this isn’t a way for the “man” to take advantage of us – this is how we all can take advantage of “the man”. Never before has everyone been connected like this in such a trusted social network. It’s like a peer-to-peer network where we all can exchange ideas and avoid all of the social barriers that exist in real life, it can let us come up with ideas on a massive scale and still trust the end results.. oh man I could go on forever!

Here are some of my Facebook application ideas that illustrate these claims.

A clever developer could build a “Degrees of separation” tool that mapped out how everyone on Facebook knows each other. Would you trust your police chief, bank manager.. even George Bush a bit more if you found out he/she was say 6-7 steps away from you? How about 24? 200?

Taking the above idea further – get ready for this one – if you then had this friend network mapped out… What if the US/Canadian/whomever government built a Facebook application that let people vote for the next leader – and then they printed out a huge frigging diagram of who voted for what, and how you know them. Wouldn’t you trust that a bit more than the current voting system? Hell couldn’t they then mathematically figure out any attempts at spoofing or cheating this? Or even manually?

If Amazon Web Services ever got around to implementing my AMTSense idea – you could have a widget on your Facebook profile that said “Hey, find the street sign in this picture and click on it” or “translate this french into english!” and then you cash in from your networks efforts (who would do the work because they love/respect you of course!)

FogCreek’s Copilot could build a widget that would let mothers ask their sons to fix their computer and setup the terminal session automatically. Geeks could setup shop and fix all the hot girls computers in their college – oh man!

Someone could build an “anonymous salary tool” that would let people opt in and say how much they make a year. Would you make some changes if you found out everyone you know made more than you? People are so afraid to talk about what they make, in the end if just screws themselves over because of a silly social stigma.

Update – already done! — Anonymous advice – A simple app that lets your friends send you notes and recommend things you should do to improve your life that they would never say — again, because of the social barriers around doing that.

And those were just the random ideas I had while cleaning out my cats litterbox! Facebook has just given us a dynamic way to breakdown and redefine how we interact with the people we love and trust. Fearing this is like the early cavemen fearing the discovery of fire – we can put this powerful new tool to much more use than whatever damage it could potentially cause.

Saudi Arabian Banks on the Web:

Introduction

Commercial transaction began over the Internet in 1995. One particularly promising application of the Internet is in the area of bank, i.e., financial transactions that could actually take place over the Internet. The advent of Internet-based electronic finance offers considerable opportunities for banks to expand their client base and rationalize their business.

Most of the banks in the developed countries have been providing banking services through Internet while Saudi Arabia is lagging behind. However, environment is quite favorable in the Kingdom of Saudi Arabia for rapid development of Internet banking. The Kingdom has introduced Internet service as per Ministerial Decree No. 163 dated March 3, 1998. The substantial upgrading of telecommunications infrastructure that is undergoing in Saudi Arabia might help the process of Internet banking. Another advantage is that majority of the Saudis are not only familiar with PCs but also own it. Further many employees have access to computer in the work place and prefer to conduct business with banks during office hours from their offices. In fact, the future of Internet banking in Saudi Arabia is promising.

This paper surveys the status of Saudi Arabian banks in the web as it stands today and suggests ways for the successful implementation of Internet Banking. The study is developed based on the Saudi banks that are already running a Web site and only on the information available from the Web sites.

The Use of Internet Banking

Banking sector will be a leading player in electronic commerce. In 1999 nearly 60% of e-commerce in the UK was concentrated in the financial services sector, and with the expected 10-fold increase of the British e-commerce by 2010, the share of the finance will even increase. Around one fifth of Finish and Swedish bank customers are actually online, while in the USA online banking is growing at an annual rate of 60% and the number of online accounts might attain more than 15 million by 2009 (UNCTAD 1999).Banks have established an Internet presence with various objectives. Most of them are using the Internet as a new distribution channel. Financial services with the use of Internet may be offered in an equivalent quantity with lower costs to more potential customers. There may be contacts from each corner of the world at any time of day or night. This means that banks may enlarge their market without opening new branches. American banks are using the Web to reach opportunities in three different categories: to market information, to delver banking products and services, and to improve customer relationship (Diniz, 1998).The cost of the average payment transaction on the Internet is minimum. Several studies found the transaction cost through mobile phone is estimated 16 cents, a PC bank using the banks’ own software is 26 cents, a telephone bank is 54 cents, a bank branch $1.27, an ATM 27 cents, and on the Internet it costs merely 13 cents. (ITU, 1999). As a result, the use of the Internet for commercial transactions started to gain momentum in 1995. Since then, millions of commercial web sites have emerged. 3,286 banks around the world have already established their web sites. Some banks are there because their competitors have been. Surprisingly, a good number of Saudi banks have designed web sites and a very few are offering online banking.

Saudi Banks in the Web

The Web is a vehicle for the most common transactions that one could expect to have with a bank. Websites are the digitized form of brochure that provides institutional and promotional information, financial reports, vacancies and recruitment forms, search engine, ways to contact the bank etc. As at the middle of 2000, there are 11 banks with 1201 branches operating across Saudi Arabia. Of these, eight banks (73%) have established their presence in the web sites and only two of them are offering Internet banking services. These web sites are designed in Arabic and English for clients’ added convenience.

Taking a closer look at the kind of information delivered by Saudi banks on their Web sites, it is found that there is no major difference in the contents of these sites. Table-1 depicts the classification of contents in the Web Sites by Saudi banks. Most of them are better structured to provide information for public relations purposes.

The contents that are found in each of the searched Web sites include information about the bank and addresses of ATM/Branches (together with phone and fax numbers), press releases, newsletters, news about the site and welcome letters, hot links, job opportunities, publications, contact and email, feedback, site map, site search, on line form etc. Almost all of them are providing information regarding customer services that incorporate financial market, retail and corporate banking, investment, treasury services, telephone and PC banking.

About 63% of the banks have kept option for feedback to receive complaints, opinions and request services via emails. The banks are moderately concerned with the release of information about their banks (63%). On line form is less found (28%). About all banks are concerned with giving information to make contact with them via email. Job offers are very easy to find via Internet. Only 38% of the banks are using the advantages of making recruitment announcements on the Web. The production of articles and economic reports, analysis of economic performance of industries and the country are found less 38% of the bank web sites. Information on fees and rates are more often found (50%). A few banks better prepared to provide site map on their web sites (25%).

Other Electronic banking strategies like telephone banking and PC banking are also promoted on Web sites. The banks are slightly concerned with Links to other sites, only one bank has Hot Links option.Table-1 The Classification of Contents in Web Sites by Saudi Banks

Contents	SIB	SBB	NCB	SHB	ANB	RB	ARBIC	SAMBA
Internet banking Financial Market Retail banking Corporate Banking Investment Services Treasury services About the bank Financial Outlook Hot links ATM/Branches/Find Us Job / Human resources Publications Press Release/Latest News Contact and email Your feedback Site map Site search On line form Rates	* * * * * ** ** *	* * * * * *** * * *	* * * * * * * * * ** **	* * * * * ** * * * * * *	* * * * * * * *** * *	* * * * * ** ** * *	* * * * ** * * * * * * *	* * * * * * ** * ** *

Sign * means does provide service
Notes: SIB= Saudi Investment Bank	SBB= Saudi British Bank
NCB= National Commercial Bank	SHB= Saudi Hollandi Bank
SAMBA=Saudi American Bank	ANB= Arab National Bank
ARBIC=Al Rajhi Banking & Investment Corporation	RB= Riyadh Bank

Internet Banking in Saudi Arabia

Online banking allows customers to do financial transactions from their PCs at home via Internet. For the last two years the Saudi websites are built to keep the customers informed of what is going on in the bank and market. Very recently, two banks have come forward in providing Internet banking services. The other two banks (Saudi Investment Bank and Saudi American Bank) have notified on their websites that they are preparing themselves to launch the Internet banking services soon.National Commercial Bank (NCB) is the forerunner internet banking in Saudi Arabia. Alarabi Ebank, and Alahli Online are the official names of internet banking services offered by Arab National Bank (ANB) and NCB respectively for their customers so as to carry out their banking activities from home. With these Internet banking, a customer can have an easy and secure direct access to their eligible Bank accounts 24 hours a day, anywhere in the world via the Internet.To use the service a user will need to have a bank account and a PC with an Internet connection. A prospective customer can complete registration form online. However, for legal reasons he will have to print this form, sign it up, and then hand it in at any of the bank’s branches. A few days after the bank sends an email with the applicant’s user ID and invites him to go to his nominated branch to collect his secret password. Online banking is also available in Arabic and English for clients’ added convenience. The major services offered by Online banking include transfer funds between client’s own accounts, to another client of the bank, and to other banks locally and aboard; view and print account balances and summaries, last 10 account transactions, full bank account statements with up to 90 days transactions, up to-date Foreign Exchange rates and Deposit rates; request for statement of account by mail; and request for cheque book etc. Electronic banking service is free to customers of the banks (although services like foreign transfers will be charged for). Internet Banking in Saudi Arabia offers only a restricted range of services. Here online banking is just consumer banking. These banks do not have versions for use over another channel: by mobile telephone and personal digital assistant (PDA). Adequate legal and appropriate physical infrastructure are essential for the quick implementation of online banking in Saudi Arabia. However, for the successful implementation of Internet banking, customers must be made to feel confident about the privacy and security issues. Moreover, the banks have to ensure quality service which is also be a very important determinant for the success of online banking.

Conclusions

The possibility of rendering all banking services electronically, with adequate security and at the lowest possible cost, is pushing banks towards the Internet. While the banks in developed countries are working primarily via internet as non-branch banks, Saudi banks use the Internet as an information delivery tool to improve relationship with customers. Among the Saudi banks, some are using it as an electronic brochure. Very few are using as banking channel. Some others still prefer a “wait-and-see” practice. This article presents a survey on web sites of Saudi banks in order to learn about the Internet use by the banks.Online banking is still a very marginal activity in Saudi Arabia. Internet is currently being used by the Saudi banks mainly for brand awareness and promotion. The dynamic and imperatives of e-finance will push Saudi banks to build web site and to start Internet banking. For example, since people are coming to know the Internet banking system, they will soon start asking for this service from their banks thus putting pressure on the banks to go ahead fast with Internet banking. So all the Saudi banks will have a web presence as the cost advantages are so huge that there is no reason not to try it out. There is necessarily first mover advantages also.After visiting all the sites, it can be said that there is no specific strategy for exploiting the opportunities offered by the Internet. They give the impression of not being well targeted and it is not clear if they are designed for client exclusive use or to a broader group of visitors. Customers must be made to feel confident about the privacy and security issues which is be a very important determinant for the success of Internet banking. Saudi bank via Internet have much to improve in their Websites. The banks will do well if they conduct periodical surveys and take customer views on the simplicity and ease of operation of the Internet banking. For this, feedback option should take place to their websites.

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